The firm is forecasting the dollar index to drop all the way down to 94 in the first half of the year before rebounding back to around current levels at 99 by the end of 2026. That as they see slower global growth amid US tariffs, with the potential for a more K-shaped economy. In turn, their base case continues to look for US stocks to outperform the rest of the world while outlining some potential bullish and bearish forecasts as well:
In their base cane lineup, they see the S&P 500 growing by 14% while the MSCI Europe only growing by 4% and MSCI EM posting a -1% performance for next year.
Besides that, Morgan Stanley sees gold moving to $4,500/oz and copper at $10,600/ton while Brent crude oil should remain anchored around the $60/bbl mark amid soft supply-demand balance.
